Employer Based Health Insurance Essay

Employer based health benefit programs have existed in the United States for more than a century. In the 1870’s, companies in the railroad and mining industries began to hire company doctors who offered medical services to company employees (Ebri.org, 2002). The medical trends gained traction and in 1910, when Montgomery Ward began to offer insurance contracts to its employees (Ebri.org, 2002).

The United States seemed to be in a holding pattern for a number of years in the early 1900’s. Businesses slowly started to offer insurance contracts, but very few Americans had health insurance. During this time the policies that existed mainly offered hospital room, board and ancillary services (Blumenthal, 2006).

In 1942, due to rising inflation rates,

More than 850 health insurance companies exist that sell and contract with many employers (Enthoven & Fuchs, 2006). Generally speaking 11 percent of insurance premiums are just for administrative costs (Enthoven & Fuchs, 2006). In addition to, job based health insurance plan costs are passed on to employees in an unfair manner. Hence individuals in higher tax brackets often pay less for health insurance (Enthoven & Fuchs, 2006). Next, employer coverage leaves out many people who lack the basis or need for comprehensive coverage (Enthoven & Fuchs, 2006). In 2005 only 60 percent of firms with 3 to 199 workers offered coverage and approximately 20 percent of workers are not eligible and another 20 percent do not participate (Enthoven & Fuchs, 2006). Also, small low wage employers typically do not offer insurance or people may be in a position where other factors prevent them from obtaining insurance.

Employer based insurance also lacks incentives to increase health care efficiency and is often a root cause of employee labor management (Enthoven & Fuchs, 2006). In fact, employer based insurance contributes to fragmentation, and uncoordinated fee for service care (Enthoven & Fuchs, 2006). Also, these types of policies may interfere with job market mobility and pass additional cost burdens onto the employees which erode employer employee trust and relationships (Enthoven & Fuchs,